What’s the Story?

by CC August 7, 2012 9:02 am • Commentary

Reuters

Stock index futures edged higher on Tuesday, pointing to a third straight day of gains on Wall Street, bolstered by expectations the European Central Bank will act soon to contain the bloc’s credit crisis.

Spanish benchmark 10-year yields ticked down 3 basis points but were still near the unsustainable 7 percent level, underscoring the cautious tone in a market that has been previously disappointed by lack of coordination among euro zone officials.

Adding to expectations of central bank stimulus, Eric Rosengren, president of the Federal Reserve Bank of Boston, said in a New York Times interview the Fed should expand its holdings of mortgage bonds and Treasury securities until it is satisfied with the health of the economy.

Calculated Risk

This CoreLogic House Price Index report is for June. The Case-Shiller index releasedlast week was for May. Case-Shiller is currently the most followed house price index, however CoreLogic is used by the Federal Reserve and is followed by many analysts. The CoreLogic HPI is a three month weighted average and is not seasonally adjusted (NSA).

Corelogic

Home prices nationwide, including distressed sales, increased on a year-over-year basis by 2.5 percent in June 2012 compared to June 2011. On a month-over-month basis, including distressed sales, home prices increased by 1.3 percent in June 2012 compared to May 2012. The June 2012 figures mark the fourth consecutive increase in home prices nationally on both a year-over-year and month-over-month basis.

Excluding distressed sales, home prices nationwide increased on a year-over-year basis by 3.2 percent in June 2012 compared to June 2011. On a month-over-month basis excluding distressed sales, home prices increased 2.0 percent in June 2012 compared to May 2012, the fifth consecutive month-over-month increase. Distressed sales include short sales and real estate owned (REO) transactions.

The CoreLogic Pending HPI indicates that July home prices, including distressed sales, will rise by at least 0.4 percent on a month-over-month basis from June 2012 and by 2.0 percent on a year-over-year basis from July 2011.

Reuters

Italy shrank further into recession in the second quarter for a 2.5 percent yearly decline, data showed on Tuesday, threatening attempts by Mario Monti’s technocrat government to control a debt crisis that is undermining the whole euro zone.

A 0.7 percent fall in gross domestic product, only slightly better than the first quarter’s 0.8 percent decline, means the Group of Seven economy has now been contracting for at least a year, according to figures from government agency ISTAT.

WSJ

German manufacturing data fell in June as foreign and domestic orders slid. Incoming orders fell 1.7% in monthly adjusted terms, a steeper decline than the 1% drop estimated in a Dow Jones Newswires poll of 22 analysts. Domestic orders fell 2.1% in June, after a 1.4% fall the previous month. Foreign orders fell 1.5% compared with a 2.5% increase in May. Germany’s DAX index fell flat immediately after the figures but then recovered a touch to trade up 0.2% at 6932.92. The September bund contract was down 0.22 at 142.98.
And it was a dismal picture for the U.K. too, despite better-than-expected industrial production data for June.
U.K. industrial production fell by 2.5% in June after rising by 1% in May. Manufacturing production was down by 2.9% after rising 1.2% the prior month. The figures were better than expected but “it is still pretty awful,” said James Knightley, economist at ING Bank. He said the Bank of England is likely to downwardly revise its growth and inflation forecasts in tomorrow’s Inflation Report and ING expects to see a further round of quantitative easing in November.

Marketwatch

Leap’s second-quarter loss narrowed as the pay-as-you-go mobile operator took in more revenue per user. Results fell short of Street expectations, as the company lost customers during the quarter. Shares fell 11% to $4.92 after hours.

JDA Software Group Inc.’s JDAS +2.76% second-quarter earnings fell 17% as the supply-chain company’s operating expenses increased. The company also reported its first-quarter earnings declined 90% amid higher operating expenses. Shares sank 7.5% to $28.20 after hours as revenue for both periods missed analyst expectations and as the company also issued downbeat guidance for 2012.

Pfizer Inc. PFE -0.08% and Johnson & Johnson JNJ -0.41% said they are discontinuing four advanced clinical studies of a potential Alzheimer’s treatment after it failed to meet its primary goals related to improving cognition and warding off dementia. Pfizer shares fell 2.5% to $23.65 after hours while J&J shares were off 1.2% to $68. Elan, which has a 25% ownership stake in the project, saw shares slip 12% to $9.89 after hours.

Caesars Entertainment Corp.’s CZR +1.80% second-quarter loss widened as the casino operator booked a write-down on its Macau land concession and roughly flat revenue from fewer visits to some key U.S. casinos. Results missed analyst expectations. Shares were down 3.3% to $8.19 after hours.

Duff & Phelps Corp. DUF -0.07% said certain stakeholders are offering 3 million shares. Shares fell 7.1% to $13.68 after hours.

First Industrial Realty Trust Inc. FR +0.15% has begun an offering of 9.4 million shares and plans to use proceeds for general corporate purposes. Shares slid 3.5% to $12.56 after hours.

Health Care REIT Inc. HCN -2.84% said it plans to offer 11 million shares to raise funds to repay debt and for general corporate purposes. Shares were down 2% to $59.40 after hours.

McDermott International Inc.’s MDR +2.30% second-quarter earnings fell 22% amid higher costs, though the company reported improved performances at its Middle East and Atlantic segments that were partly offset by weakness at its Asia-Pacific business. Shares were off 3.3% to $11.60 after hours as revenue missed expectations.

Saba Software Inc. SABA -0.96% plans to restate its financial results for three years as it conducts an ongoing review of accounting problems. Shares slid 2.9% to $8.01.

Fitch Ratings joined two other ratings firms who lowered their outlooks on chip maker Advanced Micro Devices Inc.’s AMD -1.96% junk rating Monday, noting the company’s weak operating performance.

Boston Properties Inc.’s BXP +0.15% second-quarter profit nearly doubled as the office landlord benefited from the sale of properties in Massachusetts and other one-time items, and from increasing rental revenue.

Brookdale Senior Living Inc.’s BKD -0.54% second-quarter loss narrowed as the retirement-home operator’s revenue grew more than expected and as debt-extinguishment costs and a bigger tax provision weighed on year-earlier results.

CF Industries Holdings Inc.’s CF +0.71% second-quarter earnings jumped 24% on robust nitrogen demand and a gain on natural-gas derivatives, which more than offset a slight decline in revenue.

Chesapeake Energy Corp.’s CHK +4.52% second-quarter earnings rose 91% as the natural gas producer benefited from asset sales that brought more than half a billion to its bottom line and as it announced it is getting close to divesting its Permian Basin assets in West Texas.

Concho Resources Inc. CXO -1.87% second-quarter earnings rose 38% on a $394.8 million mark-to-market gain on commodity derivatives as the oil and gas exploration company reported that lower commodities prices offset benefits of higher production.

Activist investor Carl Icahn offered to buy the remaining shares of CVR Energy Inc. CVI +3.61% that he doesn’t already own for $29 a share and said he is willing to negotiate the price, but wouldn’t consider paying more than the $30 a share he paid in his tender offer earlier this year.

Esterline Technologies Corp. ESL +1.21% projected third-quarter quarter results below analyst expectations and lowered its full-year guidance, noting continued challenges at its defense business.

Manitowoc Co.’s MTW +2.21% second-quarter earnings soared as costs related to debt-extinguishment weighed on year-ago results, though revenue in the latest period grew less than analysts expected.

Metals USA Holdings Corp. MUSA +1.10% said certain funds affiliated with its majority shareholder Apollo Global Management LLC (APO) plan to offer 4 million shares.

Oasis Petroleum Inc.’s OAS +2.50% second-quarter earnings more than doubled as production surged and gains on derivatives increased.

TW Telecom Inc. TWTC -0.12% second-quarter earnings rose 35% as the company reported strengthening sales trends.

Vornado Realty Trust’s VNO -0.06% second-quarter profit fell 65% as the commercial-property owner booked continuing losses on its investment in J.C. Penney Co. (JCP).

Warnaco Group Inc.’s WRC +4.24% second-quarter earnings dropped 79% on debt charges tied to a sale of a lingerie brand and challenging market conditions, particularly in the U.S. and Europe, while currency fluctuations weighed on revenue. Revenue missed analyst expectations and the company cut its full-year outlook.